Passenger mobility has been undergoing a transformation due to rapid progress and development in vehicle manufacturing technology and energy storage innovations. India's think-tank NITI Aayog is in the process of developing a roadmap for higher adoption of electric vehicles (EVS) by 2030. With multiple objectives of expanding green mobility and reducing fossil fuel import, a three-stage approach is taken by NITI Aayog to shape its dream into reality. Several bottlenecks surface during the progress of converting India into 100 percent Zero Emission Vehicle (ZEV) market by 2030.

Among other factors, the high price of EVs remains as a deterrent. At present, in the Indian market, EVs in the personal car category are available in the price range of Rs 7.0 lacs to Rs 11.0 Lacs. The price range is above the affordable limit of the middle-class families. On the contrary, conventional fuel-driven vehicle are much cheaper at the entry level. The reason behind this high price is the cost of the battery that eats up a big pie of the manufacturing cost of EVs. India imports 100 percent lithium ion battery from China, Europe, US and Japan and then assembled by the car manufacturers. Factors like customs duty, Rupee depreciation, and transportation cost negatively impact final price of electric vehicles. With an objective of supporting ‘Make in India’ initiative, the government in Union Budget 2018 increased customs duty on lithium ion batteries from 10 per cent to 20 per cent. This would certainly make EVs with imported lithium batteries more expensive in India which goes against the intention of making EVs affordable and accessible.

To make ZEVs affordable for the mass market, China, USA and Norway have developed favorable ZEV policies and practices. It is observed that improvement in capacity and cost reduction in battery technology is a critical parameter for growth of electrical vehicle industry. Proactive policies in China resulted in making China as the largest battery producers with more than 60 per cent of global battery demand. In order to sustain battery production China has started hunting for Lithium sources outside the nation's boundary. In September 2017, Chinese car maker Great Wall Motor bought 3.5 per cent stake of Australian lithium miner, Pilbara Minerals. As per the deal, Great Wall will buy 75,000 metric tons of lithium-ion battery-grade lithium carbonate per year for the next five years. China's Ganfeng and Tianqi Lithium are the global leader in lithium manufacturing and supply market. As per Bloomberg data, China controls 55 per cent of Lithium-ion battery production much ahead of US’s only 10 per cent and by 2021, the China’s figure will touch 65 per cent[4].

Tesla's Gigafactory is producing lithium-ion batteries at a large scale with an objective to produce 500,000 cars per year, which would certainly reduce the gap between China and US. Japan is also conducting advanced research in solid-state battery-- next generation high-level battery, which will replace lithium gel. Toyota Motor and BMW are gearing up for introducing EV with solid state battery by 2020.

Control over lithium import is the key factor for developing battery technology and set up own battery manufacturing units. In India, to make the ambitious project of 100 percent electric fleet successful, first, the government has to shift focus from importing a huge amount of crude oil to import of lithium. The prosperity of battery manufacturing faces multiple hurdles including creating enabling environment, ensuring lithium supply, access to advanced battery technology and lithium price stability.

The government wants to push EVs and create enabling environment for domestic indigenous battery production which depends on easy access to lithium. India must build a strategic relationship with lithium rich countries like Bolivia, Argentina, Chile, Brazil, and Australia. India should acquire lithium mines or take the equity stake in some of the existing lithium miners to ensure smooth supply. Ensuring lithium supply security at the affordable price would determine the success of ZEV program in India.

Another critical concern is the absence of indigenous manufacturers for large-scale battery production in India. Commercializing ISRO's Li-ion battery production technology may cut down the price of electric cars by 10-15 percent. Collaboration and cooperation is the need of the hour. Recently, Mahindra collaborated with LG Chem for developing the battery for India's EV support. Other private parties like Reliance and Adani are pondering over to develop battery technology to be a part EV race in India. Demand, the price of the lithium battery, and return on investment would drive battery manufactures.

Price of the Li-ion battery declined from $600/kwh in 2011 to $200/kwh in 2017 and Bloomberg predicts the price could touch as low as $73/kwh in the near future. A stronger growth of ZEV would drive demand of lithium batteries; thereby bringing prices further down. Lithium producers are motivated to produce more as prices are hovering in the range of $12,000 to $15,000 per ton compared to extraction cost in the range of US$ 3,200 to 6,500 per ton, offering a margin of $8500-$8,800 per ton. Spot lithium carbonate prices are relatively volatile. China’s spot lithium price ranged from $15,000 to $24,000 per ton[10] in 2017.

Today, lithium extraction looks lucrative to investors and is expected to remain attractive in the future. Due to the lack of well-established trade of lithium, it is difficult to get a hang of the future price of lithium. The price corrections may not happen very soon and the downstream companies are exploring investment in the upstream to increase supply.

Keeping all the factors in mind India should promote research and development in solid-state battery and hydrogen cell. The government is strongly pushing implementing action-oriented EV plan and developing policies. The plan should address energy inclusion, expansion of green energy, protection of the environment, and reducing the gap of urban and rural mobility infrastructure. Further, the plan must address disposal and recycling of lithium batteries. Recycling of lithium batteries is not a common phenomenon even in the developing countries. Therefore, at the design stage, adequate measures should be taken to recycle lithium batteries which could address supply constraints and environmental challenges at the later stages.